tv Closing Bell With Maria Bartiromo CNBC February 25, 2013 4:00pm-5:00pm EST
of sell interest on the close. a lot of money being moved out of the market right now. i think you're seeing part of that coming up as we're looking at the dow index. >> i'm going to excuse myself. get back on the set. you continue to discuss. >> get ready for the next hour of the close. let's remember, you were skeptical this market until our friend ralph came here. an incredibly well respected technician. >> he's a legend. >> wildly bullish. new highs, all time highs coming this year. he's in with both feet. >> yes. >> that changed your mind. >> yes. >> you're hanging in there on that call? >> absolutely. >> even with a move like this? >> absolutely. i'd like the market come in another 3% or 4%. that would be the move i'm waiting for. that would be the move to get back in and enjoy the move back up. >> tell me why this is not complacency. >> the market, if you look at buy ins. they're very weak. you want to try and take the volume aspect out of it. >> that shows no conviction.
>> yeah. although i think we'll be a little up today. if you're looking at the close, the close is significant. but i think going forward, i think the economy even though we're only looking at 1.5% or 2% gdp growth in the quarter, they're probably going to revise it. so the economy is still expanding. it's expanding very small. there's a lot of money on the sidelines as far as corporations. you'll still see a lot of mergers and acquisitions. you'll see people coming in and buying things. i'm still in this market. >> thank you, peter. >> thank you. >> see you later. so we're down down 200 points on the dow industrials average. the biggest one-day decline so far this year. same thing for the s&p. that's the first hour. stick around. let's try and make sense of this in the second hour of "the closing bell."
and welcome to "the closing bell." i'm sue herrera. our colleague maria bartiromo will be back tomorrow. bill's going to join me in just a second. stocks sinking in a big way on fears about the outcome of italy's election. here's how we're finishing the day on wall street. certainly nothing like what we saw this morning. right now we're down 215 points on the dow jones industrial average. the nasdaq composite down 45 points on the trading session. that's a loss of almost 1.5%. and the s&p 500 is significantly down percentagewise. 27 points or 1.83%. so was the downturn part of the much anticipated pullback? or a buying opportunity? we're going to talk about that with ryan dieterich, kevin caron, and brian jacobson. welcome to all of you. appreciate you being here. let's start if we could talking about this market at this point.
and lee, i'm going to start with you, if i could. what do you do on a day like today? if you're the investor with the longer term time horizon but you don't have a big stomach for volatility. lee will join us in just a second apparently. hopefully he'll have time to think about that question. ryan, why don't you take it? >> i think in this environment it's in -- it depends. which one? >> ryan dieterich. >> got it. when you look at it right here, sue, we saw warning signs last week. and when you break it down, the market's had a good rally. maybe due for pullback consolidation for a few reasons. we did a study since 1999. what we found when you go from the first time it hit 10,000, 11,000. when you hit those 1,000-intervals the market does poorly the few months out. really quickly, something important. we follow activity and
sentiment. if you look at the demand, it's extremely high relative to calls. what does that mean to someone listening? >> very quickly ryan. >> the last two times it was that wide, last year april and september pullbacks. wouldn't be leery here. >> all right. brian jacobson. down 216 points, up 120 on friday. clearly volatility is with us right now. what's causing it and what are you doing about it? >> sure. i think that the italian elections are really the proximate cause of the down we're seeing today. that's why we see bond prices were up. e the euro was significantly weaker. i think that is almost eerily reminiscent when everybody was talked about. is italy going to be forced out of the eurozone? i don't think that will be the case. >> wait a minute. if you're just joining us, the italian election results seem to
show there's gridlock. there's no clear winner in this whole thing. but brian, i've been hearing from so many who say they buy stocks because where else are you going to invest? they see that as something of a safe haven play? you're saying they will run into a safd haven by buying stocks. >> yes. we saw yields going down significantly. interestingly the dollar versus the yen, the yen actually strengthened relative to the dollar. that was a little perplexing to see that sort of thing given the imminence of easing out of japan. but stocks are not a safe haven. they are risky assets. i think in this environment you have to be willing to take that on. i think when bernanke speaks he'll give a boost to the markets as a result of his position towards providing more liquidity. >> but you know, kevin, we've known that the fed is going to provide liquidity for some time. that has not stopped the volatility from coming into this
market. so what do you do at this juncture? >> well, we came into the year with the idea that you're going to have higher returns on the s&p 500. 10% or so on the year. but we got a big boom in the early part of the year. the vix came down dramatically. investors decided there was no risk anywhere. now that we see geopolitical risks popping up in italy, once again investors have to go back and rethink their risk profile and expected returns. so not only do you have italy, but also the sequester coming up on friday. and there's still a lingering thought about the fomc minutes last week and what it might mean if vemplgly some day if the foot comes off the gas pedal. all this has gotten investors off the sidelines thinking about what kind of risk might be out there. and i think we just went too far too fast and we were just reminded today there's still risk in the environment. >> okay. we're adding to the party here.
lee munn sson who is joining us. lee munnson, we're down 216 today. you kwaul this market is game with no rules. pretty frustrating, huh? >> yeah. it's frustrating to me. you have to remember we've got mainstream investors who have this myopic view of this stuff called the sequestration and this binary black and white thing with congress. whereas pros like ourselves, we're talking about europe and italy. we're wondering whether or not japan is going to follow through on beating their 100-year recession or not. investors have to remember there's so many more awesome things to look at than just a congressional thing. i agree. i think we could make 8%, 10% on the s&p. but again, if those mainstream investors continue to look at just that one thing that's happening in congress which is a train wreck, nobody's really
going to be able to get a plan or get their act together. >> i don't know they're just looking at what's going on in congress, gordon. but maybe what they're also looking at is a volatility index that's been spiking lately, markets that are swinging from one side of the pendulum to the other. you know, there's a lot for the individual investor to take in. and i'd like to give them a little more credit than sometimes we do. what do you see in this market at this point? and what do you pretend for the rest of the week given the fact we have the fed weighing in on things? >> it's an interesting trading day down here. vix popped. they reversed hard. guys were getting complacent earlier saying they're going to continue through friday. it was just admirational friday. they're not saying that now. this took off to the downside and took off hard. the question is is it a correction? you've got to be patient in buying. the answer is yes. but there's a caveat there. it's not just japan.
they were talking about italy earlier. but china is also restating worries that they've overstayed it over there and they're cooling down. you throw in sequestration, there's a lot of reasons for guys to step back here and lighten the load a bit. >> gordon, peter costa just said he's licking his chops as this market goes lower. this is a buying opportunity for him. he can't wait to get more stock in his portfolio. >> of all the guys on the floor, peter is one of them. i respect that. nonetheless --. >> are you skeptical of this? are you going to subscribe to the buy on the dips mentality here? >> the fact of the matter here is still driving equities higher. as long as there's the appetite here to continue to take credit at these levels. you know the equities will be following. because what are the corporations going to do with
all that money? a few other things. they're going to be mna. which we've seen examples of 37 and they're going to be looking to buy back their own stock. those are going to be the floors on it. until something major changes. but the thing you're seeing here today is a change in investor behavior. you're starting to see guys say it's not going to be a hiccup. it's going to be a correction. that's where things get interesting. that's when the vix strikes. >> but got to take it down. i love what i'm hearing but take it down to street level so people out there with the retirement nest eggs can engage. i think if you're that pessimistic in sense i think there's going to be a correction, we have to have people rebalance what their long-term risk is. >> correction is not the end of the world. >> oh, yeah. oh, i would love -- >> it's not -- >> here's the thing. >> go ahead, lee. >> this is not the end of the world but what we did see a little while ago is no one
thought that silvio berlusconi would be nowhere in contention for this race in italy. the market has to incorporate this new information that there's a lot more anti-austerity, anti-merkel sentiment in italy. i'm not saying this ultimately changes the big picture in europe, but it is a new piece of information that has to come into a market at a time when the market was up very big and vix was down. it laz to get factored in somehow. >> all right. so brian jacobson, tell me where to put my money. if i'm looking at this as an opportunity or looking for shelter from the storm. where do i put my money? >> one of the areas that i really like right now is short-term high yield. i think that's a good place to be looking. just because that way you get a little bit less volatility. it's like equities but with a coupon attached to it.
but really if i -- i still think we're going to end the year around 1600 on the s&p 500. if i buy in at 1495, sure it makes a difference. you're still up for the year. i think you can be looking at adding to positions. it's a 1.8% dropping with but it wasn't uniform. there were still a large number of stocks that were up. this is where some of the bottom-up research can really pay off in these types of environments. >> ryan dieterich, you're a chart watcher. how much damage are we doing to this market with these declines we're seeing right now? with the s&p back below 1500, the dow pulling well away from the 14,000 level. some of these benchmark numbers that we've been following for awhile, are we doing some damage to the upside here? >> i think so, bill. again, when you look at the volume, you look at friday. we had good bounce. just after lunchtime today we had more volume on this than friday. right there signs a distribution. look at the s&p 500. 1460 was the peak multiple times last year.
we could pull back to 1460 which is a 4.5% correction. if we break that, all bets are off maybe go lower. maybe hedge yourself with vxx. i know it's up a lot today. but if the market keeps going lower, it could go higher. >> are you in that, ryan? the vxx? >> yes, we're advising people to invest a little bit. not a lot, but that's a good hedge we think to lower prices if you're bullish overall. >> all right. thank you, guys. appreciate it. >> and to think it was just a couple of hours ago that we thought today might be the day for history. the dow coming within 84 points of an all-time high before obviously the sellers took over the markets. josh lipton has some details for us on that. >> hey stwl, sue. a promising start then the headlines began to hit. berlusconi, italy. the elections causing a lot of nervousness. bill gross of pimco, the bond king himselves with here's what
he had to say on twitter. are italians voting for austerity, prosperity, or promiscuity? we have our own worries on this side of the atlantic. the across the board spending cuts due on friday. due on march 1st. you add it up, you saw the vix, the fear gauge surged. that was the biggest pop since august 18th, 2011. the industrial average that had been up 81 points finishes down. the s&p 500, your benchmark gauge finishes down 27 points at 1487. financials, energy, materials, the worst performing sectors. the nasdaq down 1.4% at 3116. back to you. >> all right, josh. thanks very much. we'll be checking back. you to figure out what's going on here as many of these averages and indicators are taking us back as we finish up february to levels we haven't
seen since the beginning of the year. when we come back, the fed starting to think about backing off of its aggressive long-term interest rate. that's what was suggested in the minutes from last week. our steve leisman is reading the tea leaves. we're also talking to pros to tell us how to invest without the fed in your corner right now. also then we're going to talk corporate news. companies who might be hiding when it comes to when they're hacked. we'll go live to the cyprus security conference in san francisco. find out how often this is happening from the ceo of rsa. will a recent wave of violence in vegas hurt business or provide a buying opportunity? we'll be checking in live to las vegas in a moment. and home depot which is a dow component it's due to report earnings in the morning. will it help turnaround today's selloff or extend the losses?
mary townsend. >> that's what we've been seeing every time there has been a significant decline. trading hands here at the new york stock exchange. dow and s&p worst drop since after -- the day after the presidential elections. these were some of the losers in today's section. we saw weakness in financials. they were among the weakest performing sector. bank of america one of the biggest losers. among the retailers, lows came out with better than expected numbers but a disappointing forecast for the full year and its stock came under pressure along with dillards. its earnings missed estimates. down 9%. barnes and noble was a winner there because the chairman would like to leave the electronic book to another -- to be on its own. home builders under pressure as well. ahead of a lot of pricing data as well as news about home sales, new and pending today. one stock that did move higher
was radian. it's extending those gains from friday up just about 2%. back to you. >> and robert just pointing out to me that the dow lost 154 points just in the last hour of trade today. that is a lot of selling going into the last hour. mary thompson, thank you very much. here's the critical question for the market. is the low interest rate fed party coming to an end sooner than we been led to believe at this point? steve leisman has points on that. >> credibility and belief in what the fed will do can be as important as what the fed actually does. and what's clear is the emerging debate over how long to continue buying assets known as quantitative easing and whether the costs outweigh the benefits is causing to reassess the outlook. maybe part of today's selloff. all of this makes the selloff more important. investors will be watching to
see if he gives a hint to an early end of qe. quote, we expect the chairman's monetary policy testimony this week to offer a very robust defense of qe 3 and we would be amazed if he were to say anything that would be interpreted as a hint that the fed will slow its asset purchases any time soon. that fed actions today buying assets could lead to losses tomorrow and the hiked rates. that means a huge decline on what the fed gives to the federal budget every year. this year it totalled $80 billion. and while congress may not care so much about the details of monetary policy bill, they're going to care when it means they getless money. >> and in fact, you think this selloff -- i was just telling everybody the doughdown 154 points in the last hour. that's a result of what is expected tomorrow. >> i think if you're going to be symmetrical in your thinking and i always try to be that.
if the market went up on more qe or an infi gnat qe, then it's got to be thinking more pessimistic thoughts if there's concerns the qe won't last the entire year. >> stay there, steve. let's bring in john merrill. he's founder, chief investment officer. you agree with that, john. you think this is on weak legs now, yes? >> i do. i think the tender of the market changed last thursday with the discussion of fed minutes. the bull market has had three legs. earnings which were phenomenal that are now falling off. valuations which were exceptional that are now merely okay. and you had fed policy which was extremely st lly stimulative. raised by jeremy steinen in his paper back on february 7th that we could be setting the seeds for another financial crisis. >> so if that is, indeed the case and we saw the market selloff linked to the fed, what
does that portend for tomorrow and what do you do in this market? >> i think bernanke is going to be as positive as he can be. i agree there's nothing he's going to do to derail anything tomorrow. it's what's happening within the group and the percolation of new comments that really do question this strategy. and look at what's it doing for main street versus for wall street? these are all valid questions. we have a lot of retirees and savers who are making nothing on their savings. >> steve, you know chairman bernanke. is it possible -- how how much does he respond to markets? and the feeling that maybe the markets are being spooked by just the fed talking allowed right now about the day when they will have to remove from the qe? is it possible he changes some of his testimony tomorrow to soothe the markets? >> i do think so. i think the fed chairman ben
bernanke sees the stock market as a major conduit for his policy. and if you remember going back to jackson hull, the talk this august on expectations of the market when it comes to fed policy. the concept that if you anchor in today what will move policy tomorrow and remember what the fed did in september. they said we're going to move when there's substantial improvement in the labor market. and now the discussion, bill, and this is what's profound about the discussion. it has nothing to do with economic variables. it has to do with political variables, balance sheet variables. it's no longer about the variable that we thought we understood which was the labor market. >> john, if i could go back to your comments about main street versus wall street. in today's world it seems are very much linked. mainstream will look at the news. of course they've all watched "closing bell." they'll look at the news and see the 200 point selloff in the dow
industrial average and wonder what's going wrong in the economy. i don't know you can separate the two as much as you used to be able to. and specifically as it pertains to fed monetary policy. >> every policy creates winners and losers. the big winners from this policy have been wall street and investor class. basically the fed's objective was to boost asset prices and that's been beneficial. it's been beneficial to the informser class. but who's been the losers in this? and the losers have been main street. look at the economy. we're four years into a recovery and what kind of recovery do we have? and we're looking at normal investors who are saying let me have some return on my risk-free assets. and they're not getting it. so there's winners and losers. i think you have to look at it in that light. >> steve, what do you think of that? >> i think that's right. i think that's a concern of fed chairman ben bernanke.
i think what he's going to have to do is he's going to have to be careful as he always has been of not leading his committee. he doesn't want to -- i don't think he wants to squash the discussion, but i think b he wants the market to have the right expectation. i will tell you that i think the market may have overdone it just a bit in the following way. i think the first half a year of qe is probably well set. $500 billion is probably in the cards through june. but the question becomes after it, he's got to start talking about that and let it be known that there's a good chance that it remains in place over that period of time. i also think he's going to face a lot of the impact on main street versus wall street. >> thank you very joining us. as always, we'll check back with you and have much more on this selloff on wall street today and tomorrow morning. all the eyes of course will be on home depot. >> because that giant and dow component releases its earnings before tomorrow's open. could have a big impact on the
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there. i said it. they don't have pictures of my kids. they don't have my yoga mat. and still, i feel at home. could it be the flat screen tv? the not so mini fridge? ♪ the different free dinner almost every weeknight? or maybe, it's all of the above. and all the rest. am i home? nope. but it almost feels that way. homewood suites by hilton. be at home. the dow down sharply today. josh lipton with a look at the selloff. >> you saw the stock market tanking here. finishing deep in the red. the dow and the s&p 500 suffered the worst one-day drops since november 7th. remember, november 7th, the day after election night.
the dow drops triple digits now at the lowest level since january 23rd. the s&p 500 at the lowest level since january 18th. what happened? we're back to a market driven by headlines. political concerns on both sides of the atlantic. a positive start to the day, but then those headlines began to hit about italy and silvio berlusconi. uncertainty about the elections in italy. you can see the impact on the common currency. the euro lowest against the dollar since january 11th. in the u.s. concern about the spending cuts due on march 1st. add it up, lots of worry. the vix also called the fear gauge surging some 34% in today's session. >> thank you. meanwhile, another concern for the economy and the stock market is computer hacking. our entire financial system love lives in a digital world. let's go live to the rsa security conference in san francisco where eamon javers is
standing by. rsa is one of the top cyber security firms in the world, right? >> that's right, sue. they've got hundreds of experts here. this place is crawling with cyber security experts. what's stunning to me is the gap between what you hear from cyber security experts and the folks in washington and what you hear from the companies themselves. we spent time looking through filings to find out how often companies are disclosing cyber attacks that they really experienced. we could only find a couple of handfuls of examples of companies revealing that. you've got cyber security experts saying this is a huge problem. and on the other hand companies not saying that much about it in their filings. why is that? we've got some new data released just within the past half hour or so. take a look at some of the data here. saying investor attitudes here, they did a survey and found more than 70% of investors are interested in reviewing public
company cyber security practices and nearly 80% would not likely consider investing in a company with histories of cyber attacks. that might be one reason companies are not likely to disclose. >> let's talk about that. thanks. our next guest expects cyber hacking to get worse before it gets better. coviello joins us now. you heard eamon's report. these companies are afraid that if they make public the frequency of cyber attacks, it could hurt their bottom line. how -- how frequent is it? are they vastly underreporting? do you blame them for underreporting right now? >> well, there's a big problem with the fact that in many cases a lot of these companies don't even know they've been breached. they don't know they've been attacked and don't know a lot of their intellectual property has been copied. that's one big issue. second big issue is the fact companies may be breached but
nothing got stolen. they were able to repulse the attack -- >> so far. >> so far. and in that case, they may not want to be embarrassed that they were breached even if nothing happened. the third instance is if they know something's happened and you need to distinguish between something being stolen which means you don't have it anymore and something being copied. if i.p. is copied, it may not show up in a competitor's products for years to come. how do you put a value on that? and how do you disclose that? there's a whole host of issues that have to be considered when you talk about that. but i will say -- >> let's do this. let's bring it home for people who deal with banks. we hear about the hacking that goes on or the attempted hacking of banks. b of a and citi group and chase, everybody admits there's been attacks on them and deflections. but should we worry about our internal bank accounts we access online because of hackers?
should that be a concern for the average checking account out there? >> for the most part, no. the banks actually of all the industries do probably the best job of protecting themselves. the attacks you've seen recently are something called ddos attacks which disrupt banks to carry on business. this is a serious escalation. it appears they're coming from a nation state that sponsors terror. that's one of the things we have to be looking forward about and doing a better job protecting ourselves. >> all right arthur coviello of rsa, thank you for your thoughts today. as we continue, more on today's big selloff and why some say it may be about to get worse because of washington's dysfunction. as blunt automatic spending cuts are set for four days from now. we're back in a minute. if your tires need to be rotated, you have to get that done as well. jackie, tell me why somebody should bring they're car
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>> war of words is right. it was just the application of public pressure by both sides. first by president obama at the white house when he talked to the nation's governors about ways in which the automatic spending kutss will hurt their states trying to get them to put pressure on the congress. but he also described a way out for republicans and democrats. here's the president. >> democrats like me need to acknowledge that we're going to have to make modest reforms in medicare if we want the program there for future generations and if we hope to maintain our ability to invest in critical things like education, research, and infrastructure. but we also need republicans to adopt the same approach to tax reform that spaker boehner championed just two months ago. >> but of course of the two parts the president outlined, republicans only agree with the first which is a point boehner made at his news conference about a half an hour ago. here's the speaker. >> the president says we have to
have another tax increase in order to avoid the sequester. well, mr. president, you got your tax increase. it's time to cut spending here in washington. >> and that is the stalemate in a nutshell. the only question is whether or not we get enough public pressure from the backlash and reaction to these cuts in order to force the two sides together to come to some accommodation. perhaps late in the month of march or some time later in the spring. >> all right, john harwood there in washington. let's get back to josh lipton with this market flash. josh? okay. >> you know what? let's talk to the republican congressman buck mckeon. he says it may take a market event to get something on the spending cuts. what do you think? he joins us from capitol hill. when you say a market event, are you talking about the type of move we saw in the market today? or are you talking about something more severe?
>> well, i think the market just gives us a chance to show what people are really thinking. i think they're just starting to focus in on what's happening here. you know, the president sounds like the last couple of weeks all of a sudden he realizes sequestration is a problem. it was his idea originally. he told us a year ago if we tried to fix it, he would veto it. and if he had just paid attention to all of his military leaders from the secretary of defense on down, we held five hearings to hear from them how important it was to not do this and how bad it would be on the military. then we had a hearing on how bad it would be to the economy. this was over a year ago. it's like the president now is just ai wakening to the fact. >> i have to say. we hear from plenty of economists who come on this show saying a lot of what we're hearing are scare tactics from people who will be most effected in their own back yard. whether it's the military or other domestic programs that
would be cut as a result of the sequestration. the economists tell us while it does have some impact on the economy, it doesn't happen overnight on march 1st. the impact on the economy is not as bad as a lot of the doomsayers are making it out. what do you say? >> we have been told for years we would have a certain amount to spend for military this year. we have now cut 4$487 billion ot of that at $50 billion a year. and that kicks in this year. they're already grappling with that. then you add sequestration on top of that, $500 billion. understanding that we're now five months into this process. the fiscal year ends september 30th. all of these cuts that start march 1st, this one year we're going to have to deal with in seven months. to me that's pretty devastating. and the economists say that we could lose 2 million jobs. we've been told the military is going to take 190,000 personnel
out of the army. 20,000 out of the marines. they're going to come home, go right on to the unemployment lines with a fragile recovery i think that's pretty devastating. >> all right. congressman, thank you for your thoughts today. appreciate it very much. >> thanks for having me. thank you. >> i don't know where we're going. are we going to josh or this tease? all right. >> let's talk about home depot. >> i'm just going to read it. can home depot nail down good earnings tomorrow or will it turn the screws? >> it is a dow component. that could be a catalyst for what happens with stocks tomorrow following the selloff of better than 200 points in the dow jones industrial average today. we'll be back in a minute. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars.
after today's big market fall, can dow component home depot help rebuild the market's gains? diana olick previews the report for us. hi, diana. >> hi, sue. you know, as housing recovers and home improvement surges yet again, wall street is looking for big things from home depot who reports earnings tomorrow morning. analysts have suggested a profit of nearly 64 cents a share. that would be up from 50 cents a share in the same quarter one year ago. estimates have been increasing for the home improvement retailer as home depot has seen a rise in revenue. for the fourth quarter expected
to rise just over 10% to $17.7 billion. for the full year they're looking for revenue at $74.2 billion. the retailers have been benefitting not just from the housing recovery but also from what has been left over from the housing crash. that is distressed properties. investors are buying them up still at a fast clip and then renovating them to put up for rent. >> thank you. with the dow and the s&p 500 suffering the worst day of the year so far, all eyes are indeed on home depot. the component are reporting earnings at 6:00 a.m. eastern time. those numbers will now be crucial following today's big losses. >> let's talk about it with david strasser. he has a neutral rating on home d depot. thank you very joining us. >> it had been downgraded back in the fall around valuation. they're doing a great job. they're executing. and tomorrow morning is going to be a great number.
the question is what's priced into the stock here. >> all right. michael, you have a buy rating on home depot. it indicates you think there's more value here. >> i feel the valuation question is one that comes up a lot. and i think the valuation of 18 times 2013 and 16 times 2014 is warranted for a company that's going to grow earnings 15 to 20% the next few years and has amongst the most defendable business models in retail. and by the way, they have great momentum at their back right now. i think the stock still has more room to go. especially after the 7% pullback in the last few days. >> that momentum, this is a company that's considered one of the proxies for the housing market in our economy. that momentum, is that what you're saying? the housing market has room to grow? >> i would argue it as an asymmetric risk/reward versus housing. it should fully participate on the housing side as the market continues to unfold. but with a lot of these other
companies, the outcome is binary. with home depot, they're cushioned on though downside in the event that consumers are unwilling to make the bigger ticket purchase. they will continue to repair and maintain. >> yeah. that's it, david. i was going to say it's not just the housing market per se in terms of new sales. but it also has to do with the rebuilding, the renovations, et cetera. plus they're executing well on their business model, are they not? >> they're executing really well. as well as any retailer. but what we've struggled with is if you take in the heat of the highs, the best part of the housing market in the mid-2000s, they outperformed gdp. almost 100 of that was related to store maturation. you take a 1%, 2% gdp and talking about it, they're going to peak at 4% or 5%. we're fully flowing that through our model.
and we just still struggle from a valuation standpoint of how much higher it can go here. we're just trying to look at the model from that perspective. >> i got to go at this point. but thank you, both. we'll see what the guidance is from home depot. >> 6:00 a.m. when we come back, still more to come on today's market selloff. let's say you pay your guy around 2% to manage your money. that's not much you think. except it's 2% every year. does that make a difference? search "cost of financial advisors" ouch. over time it really adds up. then go to e-trade and find out how much our advice costs. spoiler alert: it's low. really? yes, really. e-trade offers investment advice and guidance from dedicated, professional financial consultants. it's guidance on your terms, not ours. that's how our system works. e-trade. less for us. more for you.
all right, let's kick things around on this market selloff today. joining us, our colleagues, mary thompson here with us in new york and josh lipton back at hq. mary, it's clear the sentiment in the markets changed last week when the fed minutes came out. and everybody got spooked. maybe qe is not going to last forever? >> that was certainly the fear, you know, last week, and then what's interesting today, was just reading a note from a trader who said, what happened the last time we saw the vix spike the way it did, which was back in november 2011. and he said, the headlines at that time, when you saw that spike in the vix, stocks got hammered on fears about italy. so, once again today, in addition to the concerns that you may have about qe maybe easing or ending sooner than expected, once again, these concerns about italy and it's
fiscal issues and how that might effect the euro zone coming to the for and hitting the u.s. markets hitting very hard. >> josh brown is joining us on the phone, as well. so, josh, what struck all of us, the momentum to the down side, better than 150 points lost in just the last hour alone. what does that tell you about what to expect on the open tomorrow morning? is there more pressure, do you think, in the market? >> well, i think what's interesting is that this coincided with some bearish diver jenses beneath the surface, so to speak. if you look at the leadership groups of last week, you saw that rotation away from small caps into more of the consumers, the utilities. and that's not really the group you want to see lead. so, i think people stuck around and basically said, look, we'll ride this. we'll stay long the market until it gives us a reason not to.
today, you got that reason not to. and, so, they're going to look back and they're going to retro fit this italy thing or the spike in the yen, or whatever they'll say, but i think tomorrow is maybe a low conviction bounce. people are going to look at the fact that bernanke is speaking and they'll hang their hat on that, say, okay, maybe we want to take some exposure off, but let's see if there's a bounce tomorrow. so, i would let that play out. i would not be convinced, though, if we have a decent opening tomorrow, because this morning was a good opening and you see how low conviction a lot of the money in this market is. people are looking for an excuse to sell. and i think another selloff will give them that same excuse. >> josh lipton, can you tell us, i mean, based on what was hardest-hit today, i mean, are there defensive plays that did better than others, or how did that play out today? just everybody throwing everybody out today? >> if you look at the s&p 500, the benchmark gauge, what were the sectors getting hit, it
wasn't a surprise you saw the financials, energy materials getting hit. to josh's point, i think, listen, i'm not minimizing what happened in italy and i think you're going to have questions about whether a new government there is really going to be committed to that reformist agenda. i think you're going to hear vat gi strategists really focusing on the spreads of yields and italian ten-year paper versus german ten-year paper. but to josh's point, i think, listen, we had an incredible run. a lot of people were waiting for this pull-back that people were waiting for. some guys, like tom lee, a bull's bull, he told his clients this week, near term, he didn't see a lot of catalysts that were going to move the stock market higher. remember the headlines. a lot of them unfriendly. gas prices, tax increases and march 1st, sequestration. >> hey, guys -- >> i got to go josh brown. i got to go, sorry, pal.
and i promise not to make any jokes about you phoning it in. see you later. thank you for joining us, guys. today, the dow and the s&p had the worst days of the year after opening strong. what will tomorrow bring? of course, you'll only as good as your next trading day, right? >> indeed. we have a panel of wall street's top money pros with so insights for the session ahead. that's next. [ male announcer ] we created the luxury crossover and kept turning the page, writing the next chapter for the rx and lexus. this is the pursuit of perfection. [ male announcer ] you are a business pro.
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well, today opened with the talk of all-time highs for the dow, but after a 200-point drop, what can we expect for tomorrow? 30 seconds are on the clock. let's find out what our gelss think. we have scott carmack from leader capital. mason slain from interactive data and t. doug dale from security. scott, item us what you are watching tomorrow. >> we'll be watching the kay schiller composite index. they are looking for a 6.6% increase yearover year in home values. we'll be looking for new home sales. market expectation are for 380,000. we think both surprise to the upside. this market is concerned about the fed ending qe. we think economic strength begets market weakness. look for strong economic data to drive the dollar higher.